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E5-4 and E5-5 [LO 5-1, 5-5]

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Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 01,700 units, and monthly production costs for the production of 1,300 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs	Total Cost
Direct materials	$	1,500
Direct labor		7,500
Utilities ($120 fixed)		590
Supervisors salary		2,700
Maintenance ($340 fixed)		530
Depreciation		850

E5-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio, Preparing Contribution Margin Income Statement [LO 5-5]

Suppose it sells each birdbath for $28.

Required:

1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold.

2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,500 units.